Amazon Go is going big(ger) in suburban locations

Discussion
Rendering: Amazon
Jan 26, 2022

Amazon.com is opening larger versions of its Amazon Go convenience store concept in the suburbs.

The retail and technology giant is planning a store for Mill Creek, WA, which is located about 20 miles outside of Seattle where Amazon debuted its first Go store in 2018. The new store will be 6,150 square feet, reports The Verge, substantially larger than current Go stores located in more urban areas. The first Go location measured 4,100 square feet.

Amazon sees its new locations — a second is planned in the Los Angeles metropolitan area — as ideally suited to meet the needs of consumers in the suburbs. It does not appear as though fuel or electric charging stations are part of Amazon’s plans for its first store based on a rendering published on USA Today.

We think local residents and commuters will enjoy the ease of our Just Walk Out Shopping to quickly and conveniently shop from an expanded selection of tasty, ready-to-eat food items and grab-and-go beverages and snacks in their own neighborhood,” said Amazon in a statement.

There are currently around 24 Go stores operating in the U.S., with units in Chicago, Los Angeles, New York and Seattle. The number of Go units are well below Amazon’s original growth projections for the format that would have had it with around 150 by the end of 2020. The advent of the pandemic may have affected Amazon’s plan to scale the concept. Perhaps its move into the suburbs will provide a path to more rapid expansion.

Amazon has also teamed up with Starbucks on a new joint concept store on 59th Street between Park and Lexington Avenues in New York. The store brings together Starbucks’ Pickup concept with Amazon Go.

Katie Young, senior vice president of global growth and development at Starbucks, said last November that the goal behind the concept was “to give our customers the ability to choose which experience is right for them as they go through their day, whether it is utilizing the Starbucks and Amazon apps to purchase food and beverages on the go, or deciding to stay in the lounge for the traditional third place experience Starbucks is known for.”

Amazon and Starbucks are planning to open at least two more locations.

DISCUSSION QUESTIONS: Will Amazon Go convenience stores be successful in suburban locations? What products and services will Amazon need to offer to compete against other c-store operators in those areas?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I could see these being key high service level distribution and returns points, while also being revenue generating."
"It still is going to come down to putting these in the right locations with sufficient density/traffic and the required composition of shoppers."
"One of the challenges that large companies face as they seek to expand their business model, is the pursuit of options with decreasing returns."

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27 Comments on "Amazon Go is going big(ger) in suburban locations"


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Mark Ryski
BrainTrust

Amazon Go has been a much slower evolution than Amazon hoped. While the advantages of Just Walkout technology makes good sense in busy urban locations, I wonder why Amazon believes that this will be attractive in larger suburban locations. Furthermore, I’m not certain the current Amazon Go offering adds much to what consumers can already get from other c-store operators in these areas.

Overall, I’d say this latest move is incremental evolution for Amazon to experiment with Just Walkout technology in a larger format, but that’s about it. The technology overhead required for Go stores is prohibitive and the slow pace of Amazon’s expansion is proof positive of this.

Shawn Harris
BrainTrust
Shawn Harris
Board Advisor, Light Line Delivery
10 months 12 days ago

I could see these being key high service level distribution and returns points, while also being revenue generating. Goods consolidation is key to supply chain economics.

Zel Bianco
BrainTrust

We go to convenience stores because they are generally quick. I have found that lately, the lines are quite long so yes, I think it will take off, but slowly. It will make the convenience store trip more convenient, but just as self-checkout was going to be the answer to slow checkout, they are not for everyone. Younger shoppers will adopt very quickly just as they have in urban areas. It will become more prevalent as the issue of getting workers to work retail will not be going away anytime soon.

Gene Detroyer
BrainTrust

Absolutely, “It will make the convenience store trip more convenient.”

Jenn McMillen
BrainTrust

Most people live in the suburbs. Most people are Amazon customers. Labor is in short supply. Ergo, I’m not sure how this could fail?

Richard Hernandez
BrainTrust
Richard Hernandez
Merchant Director
10 months 12 days ago

Has anyone ever seen any loss prevention data on these stores? Where I live there are several c-store robberies (neighborhood non-specific) everyday and I have always wondered how Amazon handled it.

Dick Seesel
BrainTrust

I’m not sure that one store in a suburban Seattle location really signifies a major rollout of Amazon Go. The company can afford to experiment with different sizes, formats, and location strategies while it decides how and where to expand the concept. However, C-stores like Wawa (with its much bigger footprint) may be working on their own “touchless checkout” technologies while Amazon takes its time.

Dick Seesel
BrainTrust

At 6,000 square feet, and minus gas, this almost feels like a mini-Aldi (with advanced technology) rather than a conventional C-store.

George Anderson
Staff

If only Aldi or Lidl had a “Just Walk Out’ experience they’d attract more shoppers who don’t want to deal with the mad dash of trying to bag your purchases quickly enough to not hold up those in line behind you.

Steve Montgomery
BrainTrust

I agree. One of the primary reasons people go to a c-store is for fuel. Will be interesting to see the impact no fuel has on site traffic.

Dion Kenney
BrainTrust
10 months 12 days ago

One of the challenges that large companies face as they seek to expand their business model, is the pursuit of options with decreasing returns. If they pursue enough low-return options, eventually they become a large operation that has lost its “magic.” Despite their powerful data analytics and increasingly robust logistics, doesn’t an “Amazon powered c-store” look pretty much like any other?

Brandon Rael
BrainTrust

The just walkout Amazon Go technology solutions have been gaining some momentum lately. However, the rollout has not been at the rate we initially expected from Amazon. Considering that there are labor challenges and the lines are overwhelming in the grocery and convenience stores, perhaps the Amazon Go operating model is the solution we need in the suburbs.

The self-checkout process has had its challenges and, at times, is a friction-filled experience for consumers. An Amazon Go just walkout technology may make your trip to the local convenience store and grocer a bit more seamless and efficient. Efficiency matters; however, it will be interesting to see how Amazon’s other physical retail formats compete on price, quality, assortments, service, and the overall customer experience.

David Spear
BrainTrust

In certain suburbs where there isn’t a strong C-store player, the Go concept will thrive, but where you have very innovative, successful operators like Wawa, QT, Sheetz, Racetrac, etc, I think Go will be challenged. Amazon loves to tinker and this is another example of testing the waters, applying insights and transferring them to other existing and in-the-works concepts.

Ricardo Belmar
BrainTrust

Although a single store, for now, should be considered more of a test than a rollout, the Amazon Go concept could see quite a bit of success in certain suburbs. The lack of gas or charging stations may limit its appeal and accessibility in some suburbs, however, particularly those where numerous alternative c-store brands already have a presence. The Amazon grocery concepts are more likely to succeed in the suburbs than the Go stores, but there’s no reason Amazon shouldn’t try both formats. If these Go stores also serve as customer service points for merchandise pickup and returns, then that alone could be a factor at driving foot traffic away from other c-store brands in the neighborhood.

Brian Numainville
BrainTrust

It still is going to come down to putting these in the right locations with sufficient density/traffic and the required composition of shoppers. While everyone can utilize a c-store, not everyone will be into using Just Walkout technology. So, Amazon continues to test this in different contexts and slowly roll it out.

Lisa Goller
BrainTrust

Yes, it will thrive. Virtual work cements home as our hub, fueling demand for all things local and convenient. Expanding Amazon Go into suburbs gets CPG goods closer to more homes.

A highly localized assortment of popular and innovative goods will help Amazon compete. Protecting product availability and keeping prices attractive will also strengthen this model.

I can even imagine adding in-store Starbucks kiosks to tie our grocery and coffee habits into smart loyalty opportunities.

Steve Montgomery
BrainTrust

If the major appeal of the Amazon Go larger formats is the ability to avoid a line in a typical c-store, they should note the average c-store customer is in and out of the store in less than four minutes. That time is likely to continue to decline as more and more c-stores install one of the various types of self checkout technology.

Ken Morris
BrainTrust

Without fuel pumps or charging stations, and weighing in at over 6,000 square feet, these new Amazon Go stores are an entirely new twist on the C-store concept. Frictionless retail will change shopping behavior. One effect will be reducing in-store time, so shoppers will be more likely to make more frequent visits for items as they need them. Amazon must be using RFID extensively to cover all those SKUs. Now, how long will it be before the “flash robs” gangs figure out a way to clear out an Amazon Go store in a few minutes or less?

David Naumann
BrainTrust

While Amazon’s rollout plans for Amazon Go stores has been dramatically slower than expected, it may accelerate now. The primary obstacle for Amazon Go expansion was probably the ROI has not been positive due to the cost of the technology. According to recent articles, the estimated operating cost of a 1,000 square-foot cashierless location has dropped to just $159,000 per store, each year. This is a 96 percent reduction from the $4 million it cost to run the first Amazon Go store.

Gene Detroyer
BrainTrust

Be it Amazon or Wawa or others, this is the future. I just wonder if Amazon will make more money licensing their technology than opening stores?

Natalie Walkley
BrainTrust
Natalie Walkley
Director, Körber & Enspire Commerce OMS
10 months 12 days ago

Interesting observation, Gene, around the licensing. They often take the “do it ourselves” + “let others leverage it” mentality.

Kenneth Leung
BrainTrust

Given the current labor shortage and increased inventory of retail space, it makes sense for Amazon to experiment with expanding in new locations and new formats. The suburb locations can also be used for forward staging points for same day deliveries of popular items. The cooperation format with Starbucks Pickup makes sense. Stop for a coffee, grab a convenience item. Wonder if the Starbucks is integrated to the Amazon Go checkout app or it is a just a geo co-location.

Oliver Guy
BrainTrust
Oliver Guy
Global Industry Architect, Microsoft Retail
10 months 12 days ago

Other C-stores are likely to be worried. Given the friction associated with queuing, it is difficult to see something more convenient than a “just walk out” approach. This is why other brands are launching similar concepts: Aldi in Germany, Tesco with Trigo in the UK and Sainsburys also in the UK, who have contracted to use Amazon’s technology.

Without this approach, C-stores must differentiate themselves another way — which could be around being a friendly people-based community hub — but even that could well be a challenge when faced with the needs of busy working families.

Scott Norris
Guest

I know it’s just a render, but the covered-up windows just make this look like a creepy, abandoned strip mall. Zero contribution toward community place-making or even public safety. Amazon may not care, but local governing bodies should.

Shep Hyken
BrainTrust

Amazon is a brand name consumers trust. They will also stock the most popular items — and they do an amazing job of knowing exactly what those items are. In addition, just like Whole Foods creates distribution points for Amazon, so will the Amazon Go stores.

Kai Clarke
BrainTrust

Amazon must have at least charging stations/parking spots at all of their stand alone Amazon Go stores. In states like California, this is required by the state for new construction (alongside the handicap reserved parking). All stores built in the USA who employ charging stations will also enjoy Federal infrastructure tax credits as well. This is a critical component of new construction in the new, energy independent age.

Anil Patel
BrainTrust

Of course, Amazon’s going to do a great job with convenience stores. Almost every person today purchases from Amazon. Since it already knows the preferences of customers dwelling in that area, Amazon will have the chance to rethink its c-store experiences and fine-tune product assortments to drive more traffic. Moreover, Amazon’s attempt in providing a complete digital experience at stores will be largely appreciated by the tech-savvy and digital-first customers.

The catch lies in identifying what’s that one thing that will inspire customers to turn towards Amazon’s Go store every time. 7-Eleven c-store is a great example here. While customers have previously relied on this 90-year-old company for only gas and smokes, 7-Eleven’s Evolution stores updated its growler stations to include craft brews, a taqueria, and Scan and Pay technology.

wpDiscuz
Braintrust
"I could see these being key high service level distribution and returns points, while also being revenue generating."
"It still is going to come down to putting these in the right locations with sufficient density/traffic and the required composition of shoppers."
"One of the challenges that large companies face as they seek to expand their business model, is the pursuit of options with decreasing returns."

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